New Delhi: British oil company Cairn Energy's share in Vedanta has dropped to a meagre 0.1 percent after it sold most of its 4.9 percent stake in the company to recover a retrospective tax demand, the oil firm said. The revelations were made by Cairn in its 2018 financial earnings statement on Tuesday. The firm also said that apart from raising Rs 5,000 crores from selling the shares together with redemption proceeds on Vedanta Ltd preference shares, the Income Tax Department has seized Rs 1,140 crores of dividend and Rs 1,590 crore of tax refund that was due.
The statement released by the British oil company said that it suffered a net loss of US $1.1 billion in the year ending December 31, 2018 primarily due to "a write-down of Cairn's investments in India."
After receiving these notices, Cairn had initiated an international arbitration against the actions of the I-T Department in March 2015, and during its pendency, the attached shares were sold
The earnings statement said that Cairn had received a notice from the Income-Tax Department in January 2014, requesting details pertaining to the group reorganisation done in 2006. Alongside, the I-T Department attached the firm's 10 percent shareholding in Cairn India. The company also added that in March 2015, the tax department had sought Rs 10,247 crore in taxes on alleged capital gains made by Cairn in the internal reorganisation.
After receiving these notices, Cairn had initiated an international arbitration against the actions of the I-T Department in March 2015, and during its pendency, the attached shares were sold.
At present, Cairn is restricted from selling its remaining shares in Vedanta.
"Cairn's plea is therefore that the effects of the tax assessment should be nullified and that Cairn should receive recompense from India for the loss of value resulting from the 2014 attachment of Cairn's shares in Carin India Ltd and the withholding of the tax refund, which together total approximately USD 1.4 billion," the statement said.